By TIOL News Service

AHEMDABAD, FEB 06, 2018: THE issue is - Whether reopening proceedings are required to be initiated against a legal representative and not against the deceased, for availing the provisions of Section 159. YES IS THE VERDICT.

Facts of the case:

The Assessee is the son of late Shri Dhirajlal Dayaljibhai Thakkar, who was engaged in the business of general merchant, commission agent and commodity broker, besides finance under the name and style of M/s. D.M. Finance. It was his case that reopening notice came to be issued to Dhirajlal Dayaljibhai Thakkar, despite being a dead person. It was pointed out that Dhirajlal Dayaljibhai Thakkar had passed away during the course of assessment proceedings and the assessee had been brought on record as his legal heir. It was submitted that in these circumstances, the impugned notice u/s 148 which was issued against a dead person, was bad in law.

High Court held that,

++ it is an admitted position that Dhirajlal Dayaljibhai Thakkar, father of the assessee has passed away during assessment. Against the assessment order passed against the deceased, the assessee herein had preferred an appeal as a legal heir of late Dhirajlal Dayaljibhai Thakkar and, therefore, the ITO was well aware of this fact. Against the order passed by the Commissioner (Appeals) the department has preferred an appeal before the Tribunal, wherein the name of assessee is reflected as the legal heir of Shri Dhirajlal Dayaljibhai Thakkar. While seeking to reopen the assessment, the AO has issued notice in relation to the assessment year 2010-11 to Dhirajlal Dayaljibhai Thakkar. Admittedly, the notice has been issued against a dead person. This court in the case of Rasid Lala, wherein the re-assessment proceedings had been initiated after the death of the assessee and the notice was issued against a dead person, held that the reassessment proceedings having been initiated against the dead person and that too after a long delay, even if section 159 is attracted, in that case also, the notice was required to be issued against and in the name of the heir of the deceased assessee. The court held that in the facts and circumstances of the case, section 159 would not be of any assistance to the revenue and, accordingly, set aside the impugned notice issued u/s 148;

++ it is seen that on a plain reading of section 159, it is apparent that for the purpose of making an assessment of the income of the deceased and for the purpose of levying any sum in the hands of the legal representative in accordance with the provisions of sub-section (1) any proceeding which could have been taken against the deceased if he had survived, may be taken against the legal representative. Therefore, in the light of the provisions of section 159, the proceedings are required to be initiated against a legal representative and not against the deceased. The impugned notice u/s 148 is therefore, not in consonance with the provisions of section 159 of the Act. Insofar as the provisions of section 292B are concerned, the same would not be applicable in the facts of the present case. As regards section 292BB, the same provides that where an assessee appears in any proceeding and cooperates in any inquiry relating to an assessment or reassessment, it shall be deemed that any notice under any provision of the Act, which is required to be served upon him, has been duly served upon him in time in accordance with the provisions of the Act and such assessee shall be precluded from taking any objection in any proceeding or inquiry under the Act. In the present case, the assessee petitioner has raised objection before completion of the reassessment and, therefore, the provisions of section 292BB would not be applicable in the facts of the present case. In the light of this discussion, the impugned notice u/s 148 having been issued against a dead person, is a nullity and cannot be sustained.

(See 2018-TIOL-204-HC-AHM-IT)